Cloud Implementation Costs, Complexity Surprise Companies

Business and IT leaders find integrating cloud with existing IT infrastructure is harder than they expected, says KPMG global survey.

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Cloud computing is of growing interest to companies around the globe, but many are finding greater costs and greater obstacles to integration with existing IT infrastructure than they anticipated.

Those are two of the conclusions that emerge from a survey by consulting firm KPMG International, "The Cloud Takes Shape," which carries the subhead "Global cloud survey: The implementation challenge."

Cloud computing has moved beyond hype into its implementation phase, the KPMG authors said. Instead of discussing whether or when they should adopt cloud computing, responses from the 674 business and IT executives surveyed illustrate that the concept is firmly implanted as a mainstream goal. "There is no longer any doubt that, as a critical set of enabling technologies, cloud can significantly impact how any organization conducts its business," the study concluded.

Implementing a cloud architecture may have to include business process redesign as well as technology infrastructure redesign. As non-IT business executives rethink what cloud computing is all about, it sometimes leads to a gap between how the two groups think about it.

Under constant budget pressure, IT managers are putting more stock in the potential cost reduction than business executives; 52% of IT managers saw that as a primary goal, while only 41% of business executives did. On the other hand, 24% of business executives counted on cloud adoption leading to business process transformation, versus 20% for IT managers.

Likewise, 34% of IT executives assumed the cloud would provide quicker speed to adoption of business-enabling technologies, while only 21% of business executives emphasized the adoption rate.

The two groups were most closely aligned in believing cloud computing would allow business process transformation, entry into new markets and improved interactions with customers. Seventy percent of the two groups combined said they agreed (38%) or strongly agreed (32%) with the statement that cloud computing was delivering "significant efficiencies and cost savings." Six percent disagreed, with only 1% strongly disagreeing, out of the 674 respondents hailing from 16 countries.

"Seven in 10 respondents either agreed or strongly agreed that the cloud environment had delivered significant efficiencies and cost savings, which in turn is creating a greater appetite and acceptance of cloud within ... the wider enterprise," the study said. (For InformationWeek's in-depth look at judging cloud expenses, see Cloud's Thorniest Problem: Does It Pay Off?)

On the other hand, 33% said getting to the cloud cost more than anticipated, citing unexpected expenses in setting up a cloud architecture or in the transition of existing systems. Once implemented, 31% said they encountered unexpected integration costs between the cloud and their existing systems. Thirty percent worried about data loss in the cloud, the privacy risk and loss of control over their own operations.

Other concerns captured a significant number of respondents. Twenty-six percent said they worried about security, lack of standards between cloud providers and an inability to gauge future demand for their cloud computing implementation.

"Organizations are quickly gaining more confidence in the security of their cloud services providers," noted Greg Bell, a principal in KPMG's U.S. business unit, in the study.

Transparency of operational controls and data and the ability to keep operations within compliance drew the concern of 18%.

The areas in which implementers felt most confident about their cloud operations were in compliance, assessing vendors' offerings and maintaining system availability. The areas in which they expressed the least confidence were in the maturity of cloud software providers, their ability to integrate cloud operations with existing architecture and achieving the full potential that cloud computing had come to represent to the organization.

"Respondents tended to underestimate the costs and complexity of integrating multiple cloud provider platforms and traditional systems into cohesive and interoperable business services," wrote Steven Salmon, principal advisor in KPMG's U.K. unit. The result is that the importance of the CIO and IT staff goes up, not down. They're needed as brokers between cloud services and the existing infrastructure, he concluded.

Most companies will make use of different cloud services to support different business functions, Salmon predicted. "But with no clear industry standards yet in place, they will find the process of ensuring interoperability to be rather complex," he wrote.

More workloads in HR, ERP, sales and CRM, which used to be "considered too sensitive or complex for cloud," are being put in the hands of cloud service providers, wrote Bell.

Although it offers expense savings, "cloud is much more than just another IT cost reduction lever," wrote Rick Wright, global cloud enablement program leader at KPMG U.S. As development teams commission the compute power they need and new cloud systems engage customers and capture feedback, the availability of cloud resources begins to change how many things are done inside a company.

Business executives are starting to realize "the transformative value that cloud can bring to the enterprise," wrote Wright. "Many are starting to look deeper into their operating models to see how these advantages can be extended into the wider enterprise."

I would say this shows that far too many businesses are jumping before creating solid, strategic deployment plans. Cloud has a host of potential benefits, but like any other investment it needs to align with goals from the start or it will only lead to unanticipated costs and disappointment.

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